UKJT Views Digital Assets as Property Under Current Regulations

Digital Assets as Property

In a recently released, thorough report, it has been divulged by the UK Jurisdiction TaskForce (UKJT), that digital assets are satisfactorily covered under existing securities laws. More specifically, digital assets are typically viewed as property.

This is an important decision, as it provides industry participants with a much needed legal clarity regarding digital assets, moving forward. With many placing high expectations on the burgeoning digital securities sector, a clear government perspective is a boon towards the structuring of future endeavours.

Key Points

While the document goes into much greater detail, the taskforce was able to summarize their decisions into a few brief points. The following is an excerpt from the document, showing their conclusions.

‘Whether English law would treat a particular cryptoasset as property ultimately depends on the nature of the asset, the rules of the system in which it exists, and purpose for which the question is asked. However:

(a) cryptoassets have all of the indicia of property;

(b) the novel or distinctive features possessed by some cryptoassets—intangibility, cryptographic authentication, use of a distributed transaction ledger, decentralisation, rule by consensus—do not disqualify them from being property; 22 Legal statement on cryptoassets and smart contracts

(c) nor are cryptoassets disqualified from being property as pure information, or because they might not be classifiable either as things in possession or things in action;

(d) cryptoassets are therefore to be treated in principle as property;

(e) but a private key is not in itself to be treated as property because it is information.’

*For those interested in reading the entirety of the announcement, click HERE.*

A Differing Approach

The process, which culminated in the decision to treat digital assets as property, took roughly 6 months. Over this time, government representatives indicate(d?) that the taskforce took a different approach than most.

Sir Geoffrey Vos, The Chancellor of the High Court of England, indicated that the approach taken was to look for a way to regulate digital assets within the confines of the current system. This is in contrast to other nations which have looked to create new regulations for a nascent asset class, in what he likens to ‘working backwards’.

UK Jurisdiction TaskForce (UKJT)

The UK relies on multiple ‘taskforces’ which strive to pave the way for the digitization of the legal services sector. The UK Jurisdiction TaskForce (UKJT), is one of these groups.

In the report, it is indicated that the UKJT is comprised of 8 individuals from varying levels of government within the UK. The members are as follows.

• Sir Geoffrey Vos, Chancellor of the High Court of England
• Sir Nicholas Green, Chair of Law Commission of England and Wales
• Mary Kyle, City of London Corporation
• Christopher Woolard, Financial Conduct Authority
• Lawrenece Akka QC, Twenty Essex
• Richard Hay, Linklaters LLP
• Peter Hunn, Accord Project
• Sir Antony Zacaroli, Justice of the High Court

Commentary

Being located in the UK, Smartlands is directly affected by the decision on the UKJT discussed here today. Reaching out to securities.io, Smartlands CMO, Yaroslava Tkalich, had to following to say on the announcement.

“As the first-ever UK-based platform specialising in tokenising the real economy assets on the Stellar blockchain, Smartlands enjoys substantial footing on the issue; with the clarification by a panel of judges and legal specialists, our almost two-year headstart turns into a major strategic advantage for years to come.”

Speaking with Arnoldas

While Ilia Obraztsov is now the CEO of Smartlands, we were fortunate to have interviewed Arnoldas Nauseda in recent months, while he held this position. Arnoldas has since transitioned into the role of Chairman, as this will allow for a greater focus on strategic expansion.

Interview Series – Arnoldas Nauseda

In Other News

As stated above, there are various approaches being taken by nations around the world, towards digital assets. The following articles take a deeper look at two, in particular, with regards to their stances – Malta, and the United States.

Firsthand Overview of Digital Legislation in Malta

Multiple States have Begun to Provide Regulatory Clarity in 2019